Thoughts on what has happened these past few weeks

Filed in Canada | Local | Market | Mortgage | Real Estate 2 Comments

Just going through some news items that have passed through my feed reader that I found interesting.

  • I found a very interesting video on the Fibonacci Rule (for trading in gold apparently).  I have my doubts on how well this really works, but it’s worth investigating at the very least.  It looks like you need a Market Club account (which i will likely look into soon).  I am skeptical about such “unexplainable” strategies, but there are a lot of things that make no sense when it comes to number theory (take a look at the Golden Ratio).  Long story short, this is a strategy i have never heard of so I would be interested to find out more about it, and how those lines are calculated in the video (honestly, i can’t find any information this anywhere).
  • Here is an Article that lists those responsible (partially at least) for the economic turmoil.  My favorite part is “… and six more who saw it coming” section, which details the smart people who profited from the collapse.
  • For Smith Manoeuvre people, MDJ does a good summary of the Lipson Case.  This is useful since the Lipsons attempted a SM-like tax strategy, however a lot more complex, and apparently completely illegal (though not obviously illegal).
  • A nice article from Chris Davies on the employment stats for Canada as of January 2009.  Interesting to note that Alberta is relatively unaffected by the massive amount of job losses (relative to the other provinces of course).  Saskatchewan also appears to be doing rather well to weather the economic storm.  Chris also does us all a solid by providing his numbers to look at (and maybe doing something with them).
  • Canadian Mortgage News had a great post on the 30 day banker’s acceptance yield, something which i have never heard of.  Seems that variable rates are driven by this yield (which was at 0.90% a few weeks ago).  He mentions the spread (prime – BAY) is high at 2.10% compared to a 10 year average of 1.69%.  While a lower BAY means a higher spread, which usually means lower variable rates, we didn’t see any adjustments yet.  However, the BoC will likely cut interest rates on March 3rd which will translate into minor subtractions from the current prime rate (otherwise the spread gets unreasonably large).  As an added note, while BoC interest rate changes affect variable rates more directly, fixed rates are not really correlated with the prime rate.  Fixed rates are governed by bond rates, as 5 year bond rates go up, you will see fixed rates go down (vice versa applies as well).  Finally, the article lists some mortgage details, and comparing my own numbers it looks like i am getting what i should be, prime + 0.8%.
  • Canadian Capitalist describes in a post that you shouldn’t go out of your way to make use of the HRTC this year.  By that he means that you may have better options, such as mortgage pre-payments or RRSP contributions.  If you have money set aside for a reno project, then now may be a good time to use it, but don’t dip into your other funds just to do home renos for the tax credit.  Personally, i am torn because i don’t have a reno fund, but i do want to convert my newly acquired basement into a rent-able space to generate a new income stream.  To do this, I would have to defer prepayments (and possibly RRSP contributions).  However, the resulting income stream would be very helpful for mortgage payments.  Additionally, owning rented space is a tax deductible expense (utils + maintenance).  I am not entirely certain whether not the conversion expenses can be considered tax deductible though, i will have to enquire about this.
  • Another post on the Canadian Mortgage News blog, this time about the benefits of variable vs fixed rate mortgages.  Most people know that more often than not (in fact 77%-90% of the time) variable is better than fixed.  However, it is noted in the article that this may be one of those rare times where fixed is actually better (you know, that 10%-23%).  Honestly I think that the article has substantial truth.  So why am I still going with a variable rate?  Well the answer is that in recent years, it has become much easier to estimate when the BoC will raise the rates.  So i am best off to hang on to the variable rate (in case the rates drop, which they most likely will on march 3rd) and when economists suspect the BoC to raise rates, i will lock into a long fixed term.  Additionally, 5 year bond rates are quite low these days so waiting for the rates to raise before comitting means that I might be able to lock into a fixed term at an even lower rate than today.
  • A local post from the Edmonton Real Estate Blog on the weekly update last week shows that I have chosen a good time to buy (for the short time span analyzed).  Edmonton real estate numbers have returned to relatively normal numbers (whether or not this is sustainable who knows), and to make matters better the (inflated in my opinion) condo prices have dropped, while SFH prices are on the rise.
  • MDJ had a cool post on getting HDTV for free!  This interests me because i currently do not have a cable package.  However, since we don’t live near the US (where the digital channel OTA switch is happening right away) I will likely not receive anything.  But in the future, when Canada finally switches over there is a good chance that free HDTV is better quality that paid HDTV.  The catch is that you don’t get all the channels.
  • MDJ explains that QuickTax now lets you build your tax return for free, and then once you decide to file with QuickTax you are charged.  This is handy as you can see whether or not QuickTax is any good first before committing to purchase it.  I will definitely be trying this out in the coming weeks/months.
  • more from MDJ (i like his blog ok???), where Ed Rempel describes how to use this recession to your advantage.  Through a nice chart capturing 183 years of US stock market history, we can visualize why the stock market is a good long term investment.  Additionally, it is pointed out that even in some of the most dire market conditions (the recessions and the depressions) the market tends to bounce back quite rapidly.  Will we see a quick (by quick i mean 2 to 3 years) bounce back to high annual gains?  History says yes we will!
  • Canadian Mortgage News explains why waiting for better fixed rates makes no sense in this market.  If you refuse to make use of variable rate mortgages, then you might as well commit to the current rates available for fixed terms.  Contact a broker and have them hold a rate for you, you don’t have to use that rate, but you can if rates go up.  If they go down, you get a new guaranteed rate from your broker.  Honestly, I do think fixed rates will go down a little but not significantly, so unless you have time to waste while you look for your house, i suggest at least reserving a rate for yourself before March 3rd.
  • Finally, to further the previous article, CMN posts an article link that helps explain how fixed rates are calculated by the lenders (PDF).  Worth a read if you are interested.

Wireless Number Portability in Canada

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Since my server had a recent catastrophic failure, this was one of the posts that was lost, so here it is back from the dead. Google cache FTW!

According to the CRTC, Wednesday March 14th, 2007 is the day that Bell, Rogers, and Telus must allow customers to keep their cell phone number when they change carriers. What does this mean? Well it means I am finally leaving Telus for a brighter future at Rogers. Now, the future may not be all that bright, but at least it’s not going to be pitch black anymore.

I recommend to anyone who reads this who is currently signed up with telus (and I suppose is on pay and talk or near the end of a contract), LEAVE THEM! You now no longer have any reason whatsoever to stay with telus, they have just become obsolete (and just in time for their pointless Telus TV attempt). I will achieve no higher level of happiness as when I see their empire built on lies, deceit, and moral crushing beauracrocy come to a satisfying crumble below my feet.

On a related note, any ideas on what phone I should look at? I kinda like the look of the Sony Ericsson K790.

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